Posted on

Priority Income Fund: Another Term Preferred Stock IPO From This Private Company



Introduction

Our goal is to present to you our IPO analysis for every new fixed-income security that enters the market and to find out if there is any trading potential. In this article, we want to shed light on the newest term preferred stock issued by Priority Income Fund. Even though the product may not be of interest to us and our financial objectives, it definitely is worth taking a look at.

The New Issue

Before we submerge into our brief analysis, here is a link to the 497 Filing by Priority Income Fund – the prospectus.

Source: SEC.gov

For a total of 1M shares issued, the total gross proceeds to the company are $25M. You can find some relevant information about the new preferred stock in the table below:



Source: Author’s spreadsheet

Priority Income Fund 6.375% Series E Preferred Stock Due 12/31/2024 (NYSE: PRIF-E) pays a cumulative fixed dividend at a rate of 6.375%. The new issue has no Standard & Poor’s rating and is callable as of 10/07/2021, maturing on 12/31/2024. Currently, the new issue trades at a price of $24.80 and has a 6.70% Yield-to-Maturity and a Yield-to-Call of 7.11%.

Here is how the stock’s YTC curve looks like:



Source: Author’s spreadsheet

Ranking

The shares of Series E Term Preferred Stock will be senior securities that constitute capital stock. The Series E Term Preferred Stock will rank:

  • senior to shares of our common stock in priority of payment of dividends and as to the distribution of assets upon dissolution, liquidation or the winding-up of our affairs;
  • equal in priority with the issued and outstanding Series A Term Preferred Stock, Series B Term Preferred Stock, Series C Term Preferred Stock, Series D Term Preferred Stock and all other future series of preferred stock we may issue, as to priority of payment of dividends and as to distributions of assets upon dissolution, liquidation or the winding-up of our affairs; and
  • subordinate in right of payment to the holders of any senior indebtedness, of which there currently are none.

The Company

Priority Income Fund, Inc. is a closed ended fixed income mutual fund launched by Prospect Capital Management LLC and Behringer Harvard Holdings, LLC. The fund is managed by Priority Senior Secured Income Management, LLC. It invests in the Senior Secured Loans, with an emphasis on current income or pools of senior secured loans known as collateralized loan obligations. The fund invests in the companies whose debt is rated below investment grade. It was previously known as Priority Senior Secured Income Fund, Inc. Priority Income Fund, Inc. is domiciled in United States.

Source: Bloomberg.com | Priority Income Fund

Top 10 Holdings As of June 30, 2019:



Source: Annual Report June 30, 2019

Financial Highlights



Source: Annual Report June 30, 2019

Dividends and Distributions



Source: Annual Report June 30, 2019

Capital Stock as of September 25, 2019 (assuming issuance of Series E Term Preferred Stock):



Source: 497 Filing by Priority Income Fund

The Priority Income Fund Family

The company has four more outstanding preferred Stocks:

  • Priority Income Fund 6.375% Series A Cumulative Term Preferred Stock Due 2025 (RIF.PA)
  • Priority Income Fund 6.25% Series B Cumulative Term Preferred Stock Due 2023 (PRIF.PB)
  • Priority Income Fund 6.625% Series C Cumulative Term Preferred Stock Due 2024 (PRIF.PC)
  • Priority Income Fund 7.00% Series D Cumulative Term Preferred Stock Due 2029 (PRIF.PD)



Source: Author’s database

The other four preferred stocks also pay a cumulative fixed dividend, at a rate of 6.375%, 6.25%, 6.625%, and 7.00%. They all have very close call dates, which occur within 15 months one after another. As regards to the maturity, the dates are slightly more distant and even PRIF-D has a significantly later maturity date.

If we compare the newly issued Series E Term Preferred Stock with the other term preferred stocks, with a Yield-to-Worst of 6.81%, PRIF-E seems to be the best from its “older brothers” by this indicator (6.62% for PRIF-A, 5.94% for PRIF-B, 5.39% for PRIF-C, and 6.34% from PRIF-D). If we look at the Yield-to-Calls and the Yield-to-Worsts of the group separately, PRIF-E has the highest YTC and the second-highest YTM. Only PRIF-D has higher YTM but at the cost of 5 years more to its maturity.

Take a look at the bubble charts, presenting the preferred stocks by their Years-to-Maturity and YTM & Years-to-Call and YTC:

By years-to-maturity and yield-to-maturity



Source: Author’s database

By years-to-call and yield-to-call



Source: Author’s database

In addition, in the following chart, you can see a comparison between the Priority Income Fund’s securities and the fixed income securities benchmark, the iShares Preferred and Income Securities ETF (PFF). What we see is an outperformance of PRIF-B over the benchmark and the rest of the company’s issues, which in turn has a close correlation with PFF. As for PRIF-D, it has too little trading history to give particular importance to the comparison. Please note the fact that these are term securities, maturing at most after 10 years and generally predisposed them to less volatile behavior as long as there is no increase in the credit risk.



Source:
Tradingview.com

Sector Comparison

The image below contains all baby bonds and term preferred stocks that pay a fixed distribution rate in the ‘Closed-End Fund – Debt’ sector (according to Finviz.com) by their Yield-to-Call and Yield-to-Maturity.

  • By Years-to-Maturity and Yield-to-Maturity



Source: Author’s database

The higher the YTM is, the better the bond. Now let’s see, do they carry any call risk.

  • By Years-to-Call and Yield-to-Call



Source: Author’s database

If we exclude the negative YTC ones and have a closer look at the main group:



Source: Author’s database

  • Here is the full list:



Source: Author’s database

Fixed-Rated Term Securities

The next chart contains all preferred stocks and baby bonds that trade on the national exchanges, pay fixed distribution, and have less than 10 years to maturity, with a positive YTC. The baby bonds, issued by Medley Management, MDLQ and MDLX, are excluded, along with AFHBL, where the situation is very severe.

  • By Years-to-Maturity and Yield-to-Maturity



Source: Author’s database

  • By Yield-to-Call and Yield-to-Maturity



Source: Author’s database

Asset Coverage Ratio

To seek to enhance returns to our common stockholders, we may borrow money from time to time at the discretion of our Adviser within the levels permitted by the 1940 Act (which generally allows us to incur indebtedness so long as our asset coverage ratio is at least 300% after incurring such indebtedness or issue preferred stock so long as our asset coverage ratio is at least 200% after issuing such preferred stock) when the terms and conditions available are favorable to long-term investing and well-aligned with our investment strategy and portfolio composition. In determining whether to borrow money, we will analyze the maturity, covenant package and rate structure of the proposed borrowings as well as the risks of such borrowings compared to our investment outlook. We previously offered shares of our Preferred Stock pursuant to a continuous offering but we are no longer doing so. As of June 30, 2019, we had $37.5 million of shares of Series A Term Preferred Stock, $25 million of shares of Series B Term Preferred Stock, $40.25 million of shares of Series C Term Preferred Stock and $26.1 million of shares of Series D Term Preferred Stock outstanding and our asset coverage ratio was approximately 406%. The Asset Coverage per Unit was $102 as of June 30, 2019. On a pro forma basis, after giving effect to the issuance of 51,740 shares of Series D Term Preferred Stock on July 3, 2019 for proceeds of $1.3 million, our asset coverage as of June 30, 2019 would have been 403%. The Asset Coverage per Unit would have been $101 as of June 30, 2019 with the inclusion of the issuance of 51,740 shares of Series D Term Preferred Stock for proceeds of $1.3 million. On a pro forma basis, after giving effect to the issuance of 51,740 shares of Series D Term Preferred Stock for proceeds of $1.3 million, and the assumed issuance of $25 million of shares of Series E Term Preferred Stock, our asset coverage as of June 30, 2019 would have been 354% and our Asset Coverage per Unit would have been $88 as of June 30, 2019 with the inclusion of 51,740 shares of Series D Term Preferred Stock for proceeds of $1.3 million and $25 million of shares of Series E Term Preferred Stock.

Source: 497 Filing by Priority Income Fund

Use of Proceeds

We intend to use the net proceeds from this offering (after the payment of underwriting discounts and commissions of $781,250 and estimated expenses of the offering of approximately $152,120) to acquire investments in accordance with our investment objective and strategies described in this prospectus and for general working capital purposes.

Source: 497 Filing by Priority Income Fund

Addition To The iShares Preferred And Income Securities ETF

With the current market capitalization of only $25M, PRIF-E cannot be an addition to the iShares Preferred and Income Securities ETF, which is important to us due to its influence on the behavior of all fixed-income securities. I’ll just remind you about the last year rally in the fixed-income borne from the redemption of the two “giants” HSEA and HSEB and the released cash of over $600M used from PFF to buy more of the rest of its holdings.

Conclusion

As fixed-income traders, we follow every one preferred stock or baby bond, which is listed on the stock exchange. As such, PRIF-E is no exception, and the homework we always do we share it with the public. It is not necessary for the IPO to be an arbitrage and a bargain, but in many cases, the new security happens to be better than the ones already trading on the market.

PRIF-E has an advantage when compared to the other preferred stocks in the family as it has the highest YTW and the second-best YTM. The company MCAP/(debt + preferred stock) ratio is 1.04, the capital stock of $160M with preferred stocks outstanding of $154M (including the Series E Preferred Stock). However, it must be taken into account that the company is private and although the asset coverage protection, it is hard for monitoring. The preferred stock family is low liquidity and it will be impossible to react if necessary.

Trade With Beta

Coverage of Initial Public Offerings is only one segment of our marketplace. For early access to such research and other more in-depth investment ideas, I invite you to join us at ‘Trade With Beta.’

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source:

Initial Public Offering & Preferred Stock News


Continue reading Priority Income Fund: Another Term Preferred Stock IPO From This Private Company

Posted on

Aaron Safier of Sapphire Wealth Advisory Group to be Featured on CUTV News Radio


Aaron Safier of Sapphire Wealth Advisory Group to be Featured on CUTV News Radio – Global Investing Today – EIN News

























Trusted News Since 1995

A service for investment professionals
·
Friday, October 18, 2019

·
499,699,521
Articles


·
3+ Million Readers

News Monitoring and Press Release Distribution Tools

News Topics

Newsletters

Press Releases

Events & Conferences

RSS Feeds

Other Services

Questions?




Source:

Initial Public Offering & Preferred Stock News


Continue reading Aaron Safier of Sapphire Wealth Advisory Group to be Featured on CUTV News Radio

Posted on

OFS Capital: A New 5.95% Baby Bond IPO



Introduction

Our goal is to present to you our IPO analysis for every new fixed-income security that enters the market and to find out if there is any trading potential. In this article, we want to shed light on the newest Baby Bond issued by OFS Capital (OFS). Even though the product may not be of interest to us and our financial objectives, it definitely is worth taking a look at.

The New Issue

Before we submerge into our brief analysis, here is a link to the 497 Filing by OFS Capital – the prospectus.

Source: SEC.gov

For a total of 2M notes issued, the total gross proceeds to the company are $50M. You can find some relevant information about the new baby bond in the table below:



Source: Author’s spreadsheet

OFS Capital Corporation 5.95% Notes Due 2026 (NASDAQ: OFSSI) pays a fixed interest at a rate of 5.95%. The new issue has no Standard & Poor’s rating but is expected to be rated “BBB+” by the less authoritative Egan-Jones Ratings Company. OFSSI is callable as of 10/31/2021 and is maturing on 10/31/2026. The newly issued baby bond is currently trading at a price of $24.80, which means it has a 6.43% Yield-to-Call and 6.11% Yield-to-Maturity. The interest paid by this baby bond is not eligible for the preferential 15% to 20% tax rate. This results in the “qualified equivalent” YTC and YTM sitting around 5.36% and 5.09%, respectively.

Here is the product’s Yield-to-Call curve:



Source: Author’s spreadsheet

The Company

OFS Capital Corporation (OFS Capital), incorporated on March 20, 2001, is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to provide its shareholders with both current income and capital appreciation primarily through debt investments and equity investments. It focuses primarily on middle-market companies in the United States, including senior secured loans, including first-lien, second-lien and unitranche loans, as well as subordinated loans, and warrants and other minority equity securities. The Company may make investments directly or through OFS SBIC I, LP (SBIC I LP), its investment company subsidiary.

The Company focuses on investments in loans, in which OFS Advisor’s investment professionals have expertise, including investments in first-lien, unitranche, second-lien, and mezzanine loans and, to a lesser extent, on warrants and other equity securities. The Company’s debt and equity investment portfolio includes industries, such as aerospace and defense; banking, finance, insurance and real estate; capital equipment; construction and building; environmental industries; high tech industries; retail; services; telecommunications, and hotel, gaming and leisure. The Company’s investment activities are managed by OFS Capital Management, LLC (OFS Advisor). OFS Advisor is responsible for sourcing potential investments, conducting research and diligence on potential investments and equity sponsors, analyzing investment opportunities, structuring its investments and monitoring its investments and portfolio companies on an ongoing basis. As part of the portfolio management process, OFS Advisor performs ongoing risk assessment on each of its investments and assigns each debt investment a credit rating based on OFS’s internal ratings scale.

Source: Reuters.com | OFS Capital Corporation

Below you can see a price chart of the common stock, OFS:



Source: Tradingview.com

While the text above provides us with a stepping stone in terms of information about the fund, it means nothing without looking at some numbers:



Source: Cefdata.com

Capital Structure

Below, you can see a snapshot of OFS Capital’s capital structure as of its quarterly report in June 2019. You can also see how the capital structure evolved historically.



Source: Morningstar.com | Company’s Balance Sheet

As of Q2 2019, OFS had a total debt of $281.5M, and with the newly issued 2026 notes, the total debt of the company becomes $331.5M that is senior to the company’s equity. This makes the Debt-to-Equity ratio at 1.91, meaning the company is a bit more leveraged as the market capitalization is not enough to cover all of its debt.

Furthermore, we also want to add one more ratio, the Earnings-to-Debt payments. One can use EBITDA instead of earnings, but we prefer to have our buffer in what is left to the common stockholder. The higher this ratio, the better. From the income statement, we can see the company had a net income of $8.17M for the TTM with $12.53M paid of interest expense. So, if we add the $2.97M yearly interest for OFSSI, we have a ratio of 0.52, which is also not very satisfactory after there is not enough buffer for the interest payments.

The OFS Capital Corp Family

There are 2 more outstanding baby bonds issued by OFS:

  • OFS Capital Corp 6.50% Notes due 10/31/2025 (OFSSZ)
  • OFS Capital Corp 6.375% Notes due 4/30/2025 (OFSSL)



Source: Author’s database

A better idea of the peer group yields can be found in the following bubble charts:

By Years-to-Maturity and Yield-to-Maturity



Source: Author’s database

By Yield-to-Call and Yield-to-Maturity



Source: Author’s database

If we compare the newly issued OFSSI with the rest of the company’s issues, with a Yield-to-Worst of 6.16% (equal to its Yield-to-Maturity), the newly issued senior notes have an advantage over its “older relatives” by this indicator. OFSSZ has a Yield-to-Call, respectively YTW, of 5.57%, which is a 0.60% lower from the new IPO. However, it becomes callable in a year, and if it doesn’t get redeemed, the possibility of getting a higher return will increase to a maximum of 6.48% (the Yield-to-Maturity) for a year less than OFSSI, which is also higher than OFSSI’s YTM. As for OFSSL, it has a Yield-to-Worst of 4.64% (its Yield-to-Call), but with the current nominal yield spread between the “L” and the new “I” of 0.425%, it’s not very likely to be called on its earliest call date. This means the maximum one could realize in OFSSL is its YTM of 6.34% (0.20% higher than OFSSI for a year less).

In addition, in the following chart, you can see a comparison between OFSSZ and OFSSL and the fixed-income securities benchmark, the iShares U.S. Preferred Stock (PFF). Despite the two baby bonds are a term, securities, maturing in 5 years, that predispose to less volatile behavior (as long as there is no increase in the credit risk), very similar behavior is observed during the mini-recession in the late of the last year and the rally thereafter.



Source: Tradingview.com

Sector Comparison

The image below contains all baby bonds that pay a fixed interest rate, with a par value of $25, and a positive Yield-to-Call in the “Asset Management” sector (according to Finviz.com). For a clearer view, the baby bonds, issued by MDLY (MDLQ and MDLX) are excluded because of their high volatility lately due to shareholders’ concern about the potential merger of MCC, MDLY and Sierra Income Corp.

  • By Years-to-Maturity and Yield-to-Maturity



Source: Author’s database

The higher the YTM is, the better the bond is, and in this case, as they all are trading close to and above their par value, it is actually their Yield-to-Best. The YTC is the Yield-to-Worst of the group. The only exceptions, actually, are the newly issued baby bond, GECCN, and CMFNL, which are the only to trade below their par value. To see how the Yield curve looks like, first, I’ll exclude all callable securities.

  • Years-to-Call and Yield-to-Call



Source: Author’s database

Fixed-Rated Baby Bonds

The next charts show a more global view of all baby bonds that trade on the national exchanges, pay a fixed distribution, and have stated maturity date of less than 10 years, with a positive YTC. Again, MDLY’s baby bonds are excluded, along with AFHBL, where the situation is very severe.

  • By Years-to-Maturity and Yield-to-Maturity



Source: Author’s database

  • By Yield-to-Call and Yield-to-Maturity



Source: Author’s database

Business Development Companies

This section contains all securities, issued by a BDC that have a positive Yield-to-Call:

  • By Years-to-Maturity and Yield-to-Maturity



Source: Author’s database

  • By Yield-to-Call and Yield-to-Maturity



Source: Author’s database

Asset Coverage Ratio

The 1940 Act generally prohibits us from incurring indebtedness unless immediately after such borrowing we have an asset coverage for total borrowings of at least 200% (i.e., the amount of debt may not exceed 50% of the value of our assets). However, the SBCAA has modified the 1940 Act by allowing a BDC to increase the maximum amount of leverage it may incur from an asset coverage ratio of 200% to an asset coverage ratio of 150%, if certain requirements are met. Under the SBCAA, we are allowed to increase our leverage capacity if stockholders representing at least a majority of the votes cast, when quorum is met, approve a proposal to do so. If we receive stockholder approval, we would be allowed to increase our leverage capacity on the first day after such approval. Alternatively, the legislation allows a “required majority” (as defined in Section 57(O) of the 1940 Act) of our directors to approve an increase in our leverage capacity, and such approval would become effective after one year from the date of approval. In either case, we would be required to make certain disclosures on our website and in SEC filings regarding, among other things, the receipt of approval to increase our leverage, our leverage capacity and usage, and risks related to leverage.

Source: 497 Filing by OFS Capital

Use of Proceeds

We estimate that the net proceeds we will receive from the sale of the Notes will be approximately $48.1 million (or approximately $55.4 million if the underwriters exercise their over-allotment option in full) based on a public offering price of $25.00 per Note, after deducting the underwriting discount and commissions of $1,562,500 (or approximately $1,796,875 if the underwriters fully exercise their over-allotment option) payable by us and estimated offering expenses of approximately $300,000 payable by us. We may change the size of this offering based on demand and market conditions. We intend to use the net proceeds from this offering to fund investments in debt and equity securities in accordance with our investment objective and for other general corporate purposes. We also intend to use a portion of the net proceeds from this offering to repay outstanding indebtedness under the PWB Credit Facility. As of October 7, 2019, we had $45.8 million of indebtedness outstanding under the PWB Credit Facility, which bore interest at a rate of 5.25% as of such date. The PWB Credit Facility matures on February 28, 2021.

Source: 497 Filing by OFS Capital

Addition to the iShares U.S. Preferred Stock ETF

With the current market capitalization of only $50M, OFSSI cannot be an addition to the iShares U.S. Preferred Stock, which is important to us due to its influence on the behavior of all fixed-income securities. I’ll just remind you about last year’s rally in the fixed-income borne from the redemption of the two “giants” HSEA and HSEB and the released cash of over $600M used from PFF to buy more of the rest of its holdings.

Conclusion

As fixed-income traders, we follow every one preferred stock or baby bond, which is listed on the stock exchange. As such, OFSSI is no exception, and the homework we always do we share it with the public. It is not necessary for the IPO to be an arbitrage and a bargain but in many cases, the new security happens to be better than the ones already trading on the market.

The company’s debt and interest payments coverage is not at its best as the company is slightly more leveraged. Although, we are talking about a BDC that needs coverage of at least 150% of gross assets less all liabilities and indebtedness not represented by senior securities, after each issuance of senior securities. The newly issued 2026 baby bond has the best YTW from the family but as regards the YTM, it gives the worst return. Moreover, with the current nominal yield spread between OFSSL and the new OFSSI of 0.425%, the 6.34% YTM seems more tempting for a year earlier maturity than “I”. With respect to the sector comparison, despite it is one of the lowest nominal yielders, with its “relatives”, it gives one of the best returns in the sector, as they are only lagging behind the RILY’s securities. The situation is also similar with respect to the BDC securities, while it is positioned somewhere in the middle in regards to all fixed-rated “babies”.

Trade With Beta

Coverage of Initial Public Offerings is only one segment of our marketplace. For early access to such research and other more in-depth investment ideas, I invite you to join us at ‘Trade With Beta.’

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source:

Initial Public Offering & Preferred Stock News


Continue reading OFS Capital: A New 5.95% Baby Bond IPO

Posted on

Yacht maker Ferretti’s cancellation caps dismal European IPO season – Reuters

FRANKFURT/LONDON (Reuters) – Italian luxury yacht maker Ferretti’s cancellation of its initial public offering (IPO) has capped a dismal European season for stock market listings, with cautious optimism evaporating amid global trade tensions and Brexit angst. Ferretti said on Thursday it had decided to pull its initial stock offering because it is not satisfied with the price. It is the fourth cancellation in Europe this month, with Kazakhstan’s Kaspi.kz KSPI.KZ postponing a London float earlier this month and Germany’s Domicil Real Estate and Logistrial pulling their deals.

FILE PHOTO: Employees work on a yacht at the Ferretti’s shipyard in Sarnico, northern Italy, April 7, 2015. REUTERS/Stefano Rellandini/File Photo

Elsewhere, private equity company KKR & Co (KKR.N) axed the listing of Latitude Financial in Australia. Behind the scenes, Swiss vending machine operator Selecta put its own plans for a 2019 IPO on ice after some early investor meetings led management to conclude the valuation they wanted was not achievable currently, people close to the matter said.

This leaves just fellow Swiss firm SoftwareONE still in the market, though that company has had a strong response for its nearly 1 billion franc ($1 billion) trade. “It feels like IPOs are being pulled left, right and center,” said one banker who manages equity fundraisings and was working on some of the upcoming deals, declining to be named. “There are many reasons for this of course, but the overarching factor is that Brexit is just hanging over Europe. Some sort of (Brexit) deal would really provide a lot of relief,” he said.

The European Union and Britain have clinched a deal on the terms of Britain’s exit from the bloc but there is fading optimism that the British parliament will approve the agreement.

It has been a challenging year for the European IPO market, with investor sentiment battered by expectations of an economic slowdown as Brexit and the U.S.-China trade war take their toll.

Ten European IPOs set to raise $2.3 billion have been canceled since the start of the year. Year-to-date, 79 European IPOs have raised $18.7 billion, according to Refinitiv data, comparing with $39.4 billion in 146 IPOs over the same period in 2018.

Nor is it just a European issue, with overall global equity capital markets volumes in the first three quarters hitting a seven-year low.

GRAPHIC: Global ECM volumes at lowest in seven years – here

“The markets are extremely volatile beneath the surface of stock index peaks. Investors are looking for growth or secure assets with stability and sufficient size and liquidity,” said Christoph Stanger, co-head of equity capital markets at Goldman Sachs, saying that investors are very selective as a result.

In a rare bright spot, African mobile networks operator Helios Towers Plc HTWS.L priced its IPO at the low end of its range, but have traded up slightly on since their market debut in London on Tuesday.

Germany’s 5 billion euro software maker TeamViewer TMV.DE successfully listed on the Frankfurt stock exchange in what was the biggest European IPO this year so far, but has since dropped almost 10% below the offer price.

“In a generally selective market environment, IPOs of non-cyclical companies worked which are showing good growth. Another crucial factor is good visibility regarding investor demand at the start of bookbuilding,” says Deutsche Bank’s Josef Ritter, head of ECM Europe.

The rest of the country’s hopefuls for the autumn season – Domicil, Logistrial and Congatec – all shelved their IPO plans, while German biotech BioNTech SE BNTX.O tumbled on its Nasdaq debut, another sign of weakness in the IPO market after the collapses of the IPOs of U.S. WeWork’s entertainment and talent agency Endeavor pulled their listings last month.

That said, the privatization IPO of French state lottery Francaise des Jeux — expected to price in November — could give the markets a boost, while bankers said 2020 could prove even brighter.

Germany IPO activity should normalize with six to nine deals and combined IPO proceeds of more than 4 billion euros expected next year, said Stefan Weiner, head of JP Morgan’s equity capital markets business in Germany, Austria, Switzerland.

Reporting by Abhinav Ramnayaran and Arno Schuetze; Editing by Lisa Shumaker

Source:

“ipo” – Google News


Continue reading Yacht maker Ferretti’s cancellation caps dismal European IPO season – Reuters

Posted on

UPDATE 5-Saudi Aramco delays planned IPO until after earnings update -sources

(Adds company comment)

DUBAI/RIYADH, Oct 18 (Reuters) – Saudi Aramco has delayed the planned launch of its initial public offering in hopes that pending third-quarter results will bolster investor confidence in the world’s largest oil firm, two sources familiar with the matter said on Thursday.

Aramco had been expected to announce plans next week to float a 1% to 2% stake on the kingdom’s Tadawul market, in what would have been one of the largest ever public offerings, worth upwards of $20 billion.

However, after a Sept. 14 attack on its Abqaiq and Khurais plants temporarily knocked out half its crude output, the world’s top exporter wants to reassure investors by first presenting results covering the period, the two sources said, speaking on condition of anonymity as the information is not public.

“They want to do all that they can to hit the valuation target. Solid results after the attack will put them in a stronger position,” said one of the sources.

The second source confirmed the offering had been postponed, and there was currently no new date set for the listing. Neither source knew when third quarter results were likely to come out.

In a statement to Reuters on Friday, Saudi Aramco said: “The company continues to engage with the shareholders on IPO readiness activities. The company is ready and timing will depend on market conditions and be at a time of the shareholders’ choosing.”

The news comes after Reuters, citing sources familiar with the IPO, reported on Sept. 24 that the offering was unlikely to happen this year in light of the attacks.

The Financial Times, which initially reported the IPO delay on Thursday, cited a source as saying the listing was delayed by “weeks”.

The prospect of Aramco selling a piece of itself has had Wall Street on tenterhooks since Crown Prince Mohammed bin Salman first flagged it three years ago.

However, his desired $2 trillion valuation has always been questioned by some financiers and industry experts who note that countries have been accelerating efforts to shift away from fossil fuels to curb global warming, putting oil prices under pressure and undermining producers’ equity value.

Then came the September attack, which initially knocked out 5.7 million barrels per day (bpd) of production, or more than 5% of global oil supply.

Aramco executives have insisted since the attack that it would have no impact on its plans to list the company. The full restoration of oil output as declared by Energy Minister Prince Abdulaziz bin Salman on Oct. 3 – at a faster clip than expected – was seen boosting the company’s image.

“The official line was that the Q3 results were very good, so they want to update the analysts and market the IPO after the Q3 numbers,” the second source said.

Aramco halted plans for a blockbuster international listing of around 5% last year amid debate over where to list overseas, but talks resumed this summer.

They were given impetus by the appointment of Yasir al-Rumayyan, a close ally of Prince Mohammed and former investment banker, as chairman of Aramco. A host of banks were given roles to arrange the listing.

Saudi investors see the IPO as a chance to own part of the kingdom’s crown jewel and an opportunity to show patriotism after the attack. (Reporting by Hadeel Al Sayegh in Dubai and Marwa Rashad in Riyadh; Additional Reporting by Shubham Kalia in Bengaluru and Saeed Azhar and Rania ElGamal in Dubai; Writing by David French in New York; Editing by David Gregorio and Sonya Hepinstall)

Source: IPOs
Continue reading UPDATE 5-Saudi Aramco delays planned IPO until after earnings update -sources

Posted on

Saudi Aramco delays planned IPO to allow for earnings update, sources say – CNBC

An employee walks past crude oil storage tanks at the Juaymah Tank Farm in Saudi Aramco’s Ras Tanura oil refinery and oil terminal in Ras Tanura, Saudi Arabia, on Oct. 1, 2018.

Simon Dawson | Bloomberg | Getty Images

Saudi Aramco has delayed the planned launch of its initial public offering, as the giant oil company wants to update investors with its latest earnings before proceeding, two sources familiar with the matter said on Thursday.

The world’s largest oil firm was to announce plans next week to float a 1% to 2% stake on the kingdom’s Tadawul market before a possible international listing.

However, after a Sept. 14 attack on its Abqaiq and Khurais plants knocked out half the crude output of the world’s top exporter, Aramco wants to reassure investors by presenting results covering the period, the two sources said, speaking on condition of anonymity as the information is not public.

“They want to do all they can to hit the valuation target, so solid results after the attack will give them a stronger position,” said one of the sources.

The second source said the offering had been postponed, and there was currently no new date set for the listing.

The Financial Times, which initially reported the IPO delay, cited a source as saying the listing has been delayed by “weeks.”

Saudi Aramco did not immediately respond to a Reuters’ request for comment outside regular working hours.

Aramco executives had previously insisted the infrastructure attack, which initially knocked out 5.7 million barrels per day of production — or more than 5% of global oil supply — would have no impact on its plans for listing the company.

Earlier this month, Energy Minister Prince Abdulaziz bin Salman said Saudi Arabia had fully restored oil output, which allowed it to focus on the IPO.

However, sources familiar with the IPO told Reuters on Sept. 24 that the offering was unlikely to happen this year, given the impact of the attacks.

Aramco’s Riyadh listing is the first step towards an eventual sale of up to 5%, sources have told Reuters.

The prospect of the world’s largest oil company selling a piece of itself has had Wall Street on tenterhooks since Crown Prince Mohammed first flagged it three years ago.

Initial hopes for a blockbuster international listing of around 5% were dashed when the share sale was halted last year amid debate over where to list Aramco’s shares overseas.

Saudi investors see the IPO as a chance to own part of the kingdom’s crown jewel and an opportunity to show patriotism after the attack.

Source:

“ipo” – Google News


Continue reading Saudi Aramco delays planned IPO to allow for earnings update, sources say – CNBC

Posted on

UPDATE 4-Saudi Aramco delays planned IPO until after earnings update -sources

(Adds source quotes, context throughout)

DUBAI/RIYADH, Oct 17 (Reuters) – Saudi Aramco has delayed the planned launch of its initial public offering in hopes that pending third-quarter results will bolster investor confidence in the world’s largest oil firm, two sources familiar with the matter said on Thursday.

Aramco had been expected to announce plans next week to float a 1% to 2% stake on the kingdom’s Tadawul market, in what could have been one of the largest ever public offerings, worth upwards of $20 billion.

However, after a Sept. 14 attack on its Abqaiq and Khurais plants temporarily knocked out half its crude output, the world’s top exporter wants to reassure investors by first presenting results covering the period, the two sources said, speaking on condition of anonymity as the information is not public.

“They want to do all that they can to hit the valuation target. Solid results after the attack will put them in a stronger position,” said one of the sources.

The second source confirmed the offering had been postponed, and there was currently no new date set for the listing. Neither source knew when third quarter results were likely to come out.

The news comes after Reuters, citing sources familiar with the IPO, reported on Sept. 24 that the offering was unlikely to happen this year in light of the attacks.

The Financial Times, which initially reported the IPO delay on Thursday, cited a source as saying the listing was delayed by “weeks”.

Saudi Aramco did not immediately respond to a Reuters’ request for comment outside regular working hours.

The prospect of Aramco selling a piece of itself has had Wall Street on tenterhooks since Crown Prince Mohammed bin Salman first flagged it three years ago.

However, his desired $2 trillion valuation has always been questioned by some financiers and industry experts who note that countries have been accelerating efforts to shift away from fossil fuels to curb global warming, putting oil prices under pressure and undermining producers’ equity value.

Then came the September attack, which initially knocked out 5.7 million barrels per day (bpd) of production, or more than 5% of global oil supply.

Aramco executives have insisted since the attack that it would have no impact on its plans to list the company. The full restoration of oil output as declared by Energy Minister Prince Abdulaziz bin Salman on Oct. 3 – at a faster clip than expected – was seen boosting the company’s image.

“The official line was that the Q3 results were very good, so they want to update the analysts and market the IPO after the Q3 numbers,” the second source said.

Aramco halted plans for a blockbuster international listing of around 5% last year amid debate over where to list overseas, but talks resumed this summer.

They were given impetus by the appointment of Yasir al-Rumayyan, a close ally of Prince Mohammed and former investment banker, as chairman of Aramco. A host of banks were given roles to arrange the listing.

Saudi investors see the IPO as a chance to own part of the kingdom’s crown jewel and an opportunity to show patriotism after the attack. (Reporting by Hadeel Al Sayegh in Dubai and Marwa Rashad in Riyadh; Additional Reporting by Shubham Kalia in Bengaluru and Saeed Azhar in Dubai; Writing by David French in New York; Editing by David Gregorio and Sonya Hepinstall)

Source: IPOs
Continue reading UPDATE 4-Saudi Aramco delays planned IPO until after earnings update -sources

Posted on

Saudi Aramco delays planned IPO to allow for earnings update, sources say

An employee walks past crude oil storage tanks at the Juaymah Tank Farm in Saudi Aramco’s Ras Tanura oil refinery and oil terminal in Ras Tanura, Saudi Arabia, on Oct. 1, 2018.

Simon Dawson | Bloomberg | Getty Images

Saudi Aramco has delayed the planned launch of its initial public offering, as the giant oil company wants to update investors with its latest earnings before proceeding, two sources familiar with the matter said on Thursday.

The world’s largest oil firm was to announce plans next week to float a 1% to 2% stake on the kingdom’s Tadawul market before a possible international listing.

However, after a Sept. 14 attack on its Abqaiq and Khurais plants knocked out half the crude output of the world’s top exporter, Aramco wants to reassure investors by presenting results covering the period, the two sources said, speaking on condition of anonymity as the information is not public.

“They want to do all they can to hit the valuation target, so solid results after the attack will give them a stronger position,” said one of the sources.

The second source said the offering had been postponed, and there was currently no new date set for the listing.

The Financial Times, which initially reported the IPO delay, cited a source as saying the listing has been delayed by “weeks.”

Saudi Aramco did not immediately respond to a Reuters’ request for comment outside regular working hours.

Aramco executives had previously insisted the infrastructure attack, which initially knocked out 5.7 million barrels per day of production — or more than 5% of global oil supply — would have no impact on its plans for listing the company.

Earlier this month, Energy Minister Prince Abdulaziz bin Salman said Saudi Arabia had fully restored oil output, which allowed it to focus on the IPO.

However, sources familiar with the IPO told Reuters on Sept. 24 that the offering was unlikely to happen this year, given the impact of the attacks.

Aramco’s Riyadh listing is the first step towards an eventual sale of up to 5%, sources have told Reuters.

The prospect of the world’s largest oil company selling a piece of itself has had Wall Street on tenterhooks since Crown Prince Mohammed first flagged it three years ago.

Initial hopes for a blockbuster international listing of around 5% were dashed when the share sale was halted last year amid debate over where to list Aramco’s shares overseas.

Saudi investors see the IPO as a chance to own part of the kingdom’s crown jewel and an opportunity to show patriotism after the attack.

Source: IPOs
Continue reading Saudi Aramco delays planned IPO to allow for earnings update, sources say

Posted on

Digital Realty Trust: The Company’s Lowest Nominal Yield Preferred Stock IPO



Introduction

Our goal is to present to you our IPO analysis for every new fixed-income security that enters the market and to find out if there is any trading potential. In this article, we want to shed light on the newest Preferred Stock issued by Digital Realty Trust (DLR). Even though the product may not be of interest to us and our financial objectives, it definitely is worth taking a look at.

The New Issue

Before we submerge into our brief analysis, here is a link to the 424B5 Filing By Digital Realty Trust – the prospectus.

Source. SEC.gov

For a total of 12M shares issued, the total gross proceeds to the company are $300M. You can find some relevant information about the new preferred stock in the table below:



Source: Author’s spreadsheet

Digital Realty Trust 5.200% Series L Cumulative Redeemable Preferred Stock (NYSE: DLR-L) pays a fixed dividend at a rate of 5.20%. The new preferred stock has a ‘BB+’ Standard & Poor’s rating and is callable as of 10/10/2024. Currently, the new issue trades at a price of $25.48 and has a 5.10% Current Yield and YTC of 4.85%. The dividends paid by this preferred stock are not eligible for the preferential 15-20% tax rate on dividends. They are also not eligible for the dividend received deduction for corporate holders. This means that the “qualified equivalent” current yield and YTC would be 4.25% and 4.04%, respectively.

Here is what the stock’s YTC curve looks like right now:



Source: Author’s spreadsheet

The Company

As per the company description from Reuters:

Digital Realty Trust, Inc., incorporated on March 9, 2004, is a real estate investment trust (REIT). The Company is engaged in the business of owning, acquiring, developing and operating data centers. It is focused on providing data center and colocation solutions for domestic and international tenants across a range of industry verticals ranging from financial services, cloud and information technology services, to manufacturing, energy, healthcare and consumer products. As of December 31, 2016, its portfolio consisted of 145 operating properties, including 14 properties held as investments in unconsolidated joint ventures, of which 104 are located throughout the United States, 32 are located in Europe, four are located in Asia, three are located in Australia and two are located in Canada.

The Company is a general partner of Digital Realty Trust, L.P. As of December 31, 2016, it owned an approximate 98.5% common general partnership interest in Digital Realty Trust, L.P. The remaining approximate 1.5% common limited partnership interests are owned by non-affiliated investors and certain directors and officers of Digital Realty Trust, Inc. As of December 31, 2016, it owned all of the preferred limited partnership interests of Digital Realty Trust, L.P.

The Company is diversified in various metropolitan areas where data center and technology tenants are concentrated, including the Atlanta, Boston, Chicago, Dallas, Los Angeles, New York, Northern Virginia, Phoenix, San Francisco, Seattle and Silicon Valley metropolitan areas in the United States, the Amsterdam, Dublin, Frankfurt, London and Paris metropolitan areas in Europe and the Singapore, Sydney, Melbourne, Hong Kong and Osaka metropolitan areas in the Asia Pacific region. As of December 31, 2016, its properties contained a total of approximately 26.1 million rentable square feet, including approximately 2.0 million square feet of space under active development, which included base building and data center projects in progress, as well as approximately 1.1 million square feet of space held for future development, which included space held for future data center development and excludes space under active development. The types of properties within its portfolio include data centers, which provide environments for the exchange, processing and storage of critical electronic information; Internet gateway data centers, which serve as hubs for Internet and data communications within and between major metropolitan areas, and office and other non-data center space.

The Company competes with CoreSite Realty Corporation, CyrusOne Inc., DuPont Fabros Technology, Inc., Equinix, Inc., QTS Realty Trust, Inc. and Global Switch Holdings Limited.

Below, you can see a price chart of the common stock, DLR:



Source: Tradingview.com

The dividend of DLR is constantly slightly rising, from $3.12 in 2013 to $4.32 that is the expected yearly dividend for 2019. With a market price of $129.71, the current yield of DLR is at 3.33%. As an absolute value, this means it pays $899.78M in dividends yearly. For comparison, the yearly dividend expenses for all outstanding preferred stocks (with the newly issued series L preferred stock) of the company is around $59.55M.

In addition, with a market capitalization of around $26.59B, DLR is the biggest “Office” REIT in the US (according to Finviz.com).

Capital Structure

Below, you can see a snapshot of Digital Realty Trust, Inc.’s capital structure as of the time of its last quarterly filing in June 2019. You also can see how the capital structure evolved historically.



Source: Morningstar.com | Company’s Balance Sheet

As of Q2, DLR had a total debt of $11.56B ranking senior to the newly issued preferred stock. The new Series L preferred shares rank is junior to all outstanding debt and equal to the other preferred shares of the company, which have a market cap of $1.1B.

The Ratios Which We Should Care About

Our purpose today is not to make an investment decision regarding the common stock of DLR but to find out if its new preferred stock has the need quality to be part of our portfolio. Here is the moment where I want to remind you of two important aspects of the preferred stocks compared to the common stocks.

  • Preferred shareholders have priority over a company’s income, meaning they are paid dividends before common shareholders.
  • Common stockholders are last in line when it comes to company assets, which means they will be paid out after creditors, bondholders, and preferred shareholders.

Based on our research and experience, these are the most important metrics we use when comparing preferred stocks:

  • Market Cap/(Long-Term Debt + Preferreds). This is our main criteria when determining credit risk. The bigger the ratio, the safer the preferred. Based on the latest annual report and taking into consideration the latest preferred issue we have a ratio of 26,590/(11,560 + 1,400) = 1.97, which is a very good number for all creditors of the company, indicating the company is well leveraged.
  • Earnings/(Debt and Preferred Payments). This is also quite easy to understand approach. One can use EBITDA instead of earnings, but we prefer to have our buffer in what is left to the common stockholder. The higher this ratio, the better. The ratio with the TTM financial results from the Income Statement data is 330/(350 + 59) = 0.80 meaning that despite the comparatively low level of debt and preferred stocks, the net income fails to fully cover the creditor’s payments.

The Digital Realty Trust Family

DLR has 5 more outstanding preferred stocks:

  • Digital Realty Trust Inc. 6.625% Series C Cumulative Redeemable Preferred Stock (DLR.PC)
  • Digital Realty Trust Inc. 6.35% Series I Cumulative Redeemable Preferred Stock (DLR.PI)
  • Digital Realty Trust Inc. 5.875% Series G Cumulative Redeemable Preferred Stock (DLR.PG)
  • Digital Realty Trust Inc. 5.25% Series J Cumulative Redeemable Preferred Stock (DLR.PJ)
  • Digital Realty Trust Inc 5.85% Series K Cumulative Redeemable Preferred Stock (DLR.PK)



Source: Author’s database

I’ll compare the newly issued Series L Preferred Stock with the rest of its “brothers” by their Yield-to-Call and Current Yield.



Source: Author’s database

With its 5.10% Current Yield, DLR.PJ and the new issue gives one of the lowest return in this regard, mainly due to their low nominal yield. However, since all issues are trading above their par value, their Yield-to-Call is the Yield-to-Worst of the group. So let’s see how the Yield curve looks like:



Source: Author’s database

The higher the YTC, the better the security. With its 4.85% YTC, DLR-L rewards a 1.35% more than the maximum you could realize if you choose second-highest YTW in the group, DLR.PK. However, as I’ve mentioned, the “L” is the issue with the lowest nominal fixed dividend rate, which means it is the most vulnerable from subsequent rate hikes. Still, we are entering a low rate environment and a good yield can hardly be found without taking higher credit risk.

In addition, you can see a comparison between DLR’s preferred stocks and the fixed-income securities benchmark, the iShares U.S. Preferred Stock ETF (PFF). On the following chart, a very close correlation can be seen between all preferreds (except for DLR-K) with PFF and a slight outperformance. As for DLR.PK, there is almost identical behavior during the recession in the late of the last year that gradually has become a smashing outperformance over the fixed-income benchmark and the rest of the company’s issues.



Source: Tradingview.com

Furthermore, there are 15 Corporate Bonds issued by the company:



Source: FINRA

For my comparison, I choose the bond that matures closest to the call date of DLR-L, the 2025 Corporate Bond.



Source: FINRA|DLR4344565

DLR4344565, as it is the FINRA ticker, is rated a ‘BBB’ and has a yield-to-maturity of 2.776%. This should be compared to the 4.85% yield-to-call of DLR-L, but when making that comparison, remember that DLR-L’s YTC is the maximum you could realize if you hold the preferred stock until 2024. The result is a yield spread of 2.1% between the two securities. This yield margin can be justified by the higher rank in the capital structure and the higher credit rating of the bond.

All REIT Preferred Stocks

Except for the DLR preferred stocks, there are only two more fixed-rate preferred stocks issued by an office REIT: BXP.PB and CIO.PA. In the charts below, I’ll compare all REIT preferred stocks with a par value of $25 that pay a fixed dividend rate, excluding the preferred stocks issued by CBL & Associates (CBL) and Washington Prime Group (WPG), as CBL has a lot of problems right now and the high volatility of the WPG-H and WPG-G.



Source: Author’s database

The next chart presents only the preferred stocks with a positive yield-to-call:



Source: Author’s database

I will add one more condition – the preferred stocks to be rated by Standard & Poor’s:



Source: Author’s database

The next bubble chart will examine how the yield curve in the sector looks. It presents only these preferred stocks that are not callable, have a positive YTC, and are rated by S&P, by their years-to-call and YTC:



Source: Author’s database

All ‘BB+’ Preferred Stocks

The last chart contains all preferred stocks that pay a fixed dividend rate, have a par value of $25, a BB+ Standard & Poor’s rating, and positive Yield-to-Call. For a better idea, SCE.PE, SCE.PB, SCE.PC, and SCE.PD are excluded because of their hundredths yield.



Source: Author’s database

Special Optional Redemption

Upon the occurrence of a Change of Control (as defined below), the Issuer may, at its option, redeem the series L preferred stock, in whole or in part within 120 days after the first date on which such Change of Control occurred, by paying $25.00 per share, plus any accrued and unpaid dividends to, but not including, the date of redemption. If, prior to the Change of Control Conversion Date (as defined below), the Issuer exercises any of its redemption rights relating to the series L preferred stock (whether the optional redemption right or the special optional redemption right), the holders of series L preferred stock will not have the conversion rights described below.

Source: FWP Filing by Digital Realty Trust

Use of Proceeds

We expect that the net proceeds from the series L preferred stock offering will be approximately $291.0 million (or approximately $334.6 million if the underwriters’ over-allotment option to purchase additional shares, is exercised in full) after deducting the underwriting discount and our estimated expenses. We intend to use the net proceeds from this offering to repay borrowings outstanding under Digital Realty Trust, L.P.’s global revolving credit facility, acquire additional properties or businesses, fund development opportunities, and to provide for working capital and other general corporate purposes, including potentially for the repayment of other debt or the repurchase, redemption, or retirement of outstanding debt securities or preferred stock, or a combination of the foregoing.

Source: 424B5 Filing by Digital Realty Trust

Addition to the iShares Preferred and Income Securities ETF

With the current market capitalization of the new issue of around $300M, DLR-L is a possible addition to the S&P US Preferred Stock iShares Index during some of the next rebalancings. If so, it will also be included in the holdings of the main benchmark, PFF, which is the ETF that seeks to track the investment results of this index, and which is important to us due to its influence on the behavior of all fixed-income securities. I’ll just remind you about the last year rally in the fixed-income borne from the redemption of the two “giants” HSEA and HSEB and the released cash of over $600M used from PFF to buy more of the rest of its holdings.

Conclusion

As fixed-income traders, we follow every one preferred stock or baby bond, which is listed on the stock exchange. As such, DLR-L is no exception, and the homework we always do we share it with the public. It is not necessary for the IPO to be an arbitrage and a bargain but in many cases, the new security happens to be better than the ones already trading on the market.

The company has good financials in terms of fixed income investors, having 2x times more equity than liabilities and is paying 16x times more dividends on its common stock than all of its outstanding preferred stocks that are standing above in the capital structure. So, here the credit risk is absolutely out of the table. Despite its lower nominal yield, DLR-L has a 1.35% higher YTW than the second-highest one in the family, DLR-K. The same is also observed in comparison with all other REIT preferred stocks. However, its current yield is one the lowest both in the sector and also with those that have the same rating of “BB+” as the new IPO. This is not necessarily a bad thing when we are talking about an environment of lowering interest rates, but whether this trend will continue after 5 years.

Trade With Beta

Coverage of Initial Public Offerings is only one segment of our marketplace. For early access to such research and other more in-depth investment ideas, I invite you to join us at ‘Trade With Beta.’

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source:

Initial Public Offering & Preferred Stock News


Continue reading Digital Realty Trust: The Company’s Lowest Nominal Yield Preferred Stock IPO

Posted on

Airbnb’s quarterly loss reportedly doubled in Q1, a bad sign as investors grow wary of money-losers

Airbnb CEO Brian Chesky.

John van Hasselt | Corbis | Getty Images

Airbnb’s losses doubled year over year in the first quarter to $306 million, as the vacation rental start-up ramps up marketing spend ahead of a possible IPO in 2020, according to a report in The Information.

The company’s sales and marketing investments rose 58% year over year to $367 million in the first quarter and marketing spend is expected to come in above the $1.1 billion spent in 2018, The Information said, citing undisclosed financial data. Revenue reportedly grew 31% year over year to $839 million, while expenses climbed 47%.

In a statement, Airbnb said, “We can’t comment on the figures, but 2019 is a big investment year in support of our hosts and guests.”

Last month, The Wall Street Journal reported Airbnb saw strong growth in total booking value during the first quarter, which could help it lure additional investors. Additionally, Airbnb said in January that it had reached its second straight year of profitability, based on an EBITDA basis, and saw a notable uptick in guest arrivals, which could point toward rapidly accelerating growth.

However, should Airbnb proceed with its plans to go public next year, it’ll likely face skepticism from investors who have grown wary of cash-burning companies like Lyft and Uber. The environment forced WeWork, which had seen its IPO valuation dwindle, to postpone its initial public offering and get its financials back on track.

— CNBC’s Deirdre Bosa contributed to this report.

Source: IPOs
Continue reading Airbnb’s quarterly loss reportedly doubled in Q1, a bad sign as investors grow wary of money-losers